The Federal Reserve’s October Beige Book paints an uncertain picture of the U.S. economy, suggesting that overall activity has changed little since September. According to the report, five of the Fed’s 12 districts saw no change in economic conditions, three reported modest growth and four noted a slight softening.
Fed Chair Jerome Powell, speaking Tuesday, said the central bank’s outlook on employment and inflation remains largely unchanged from its September meeting.
“Based on the data that we do have, it is fair to say that the outlook for employment and inflation does not appear to have changed much since our September meeting four weeks ago,” he said. However, Powell added that data collected before the government shutdown indicate economic growth may be on a somewhat stronger trajectory than previously expected.
Oxford Economics noted in a research briefing that while employment levels remain “generally stable,” layoffs and attrition are becoming more common. On the consumer side, inflation pressures are building. Eric Teal, chief investment officer for Comerica Wealth Management, wrote that about half of tariff costs have thus far been passed on to consumers, with both foreign and U.S. companies absorbing the remainder. “Ultimately, it is likely the inflation-fearing consumer will bear an even greater burden of the tariff costs,” Teal said, pointing to imported goods from Europe, India and Japan. Economists at Harvard have similarly noted that tariffs could intensify pressure on consumer prices, underscoring tension between the Fed’s twin goals of price stability and maximum sustainable employment.
The Beige Book also provided a snapshot of commercial real estate conditions across the country, revealing an uneven recovery. In Boston, overall activity ticked up slightly, but office rents were stagnant and operating costs continued to rise amid higher tariffs and persistent labor shortages. Retail leasing held steady.
New York’s commercial markets continued to improve, with the city’s office sector faring better than many other major metros. Industrial activity, however, was subdued, and CRE loan volumes saw a modest decline. Cleveland reported a modest increase in commercial property demand and construction, driven partly by manufacturers expanding capacity. Yet, demand softened for hospitality, restaurant and multifamily properties. Richmond saw a slight but “murky” uptick in CRE, with growing concerns about lower-tier office assets. In Atlanta, market conditions showed little overall change.
Chicago experienced a slight increase in activity, with improved office leasing and strong demand from restaurant operators. Sellers have also lowered asking prices in some areas. Construction activity was mixed—robust in institutional and healthcare projects, but sharply lower in new multifamily, office and industrial development, though retail held steady.
In Minneapolis, trends were largely flat. New construction remained limited, industrial subleasing rose and office vacancies stayed low despite significant price cuts on sales. Kansas City’s CRE market weakened modestly, with fewer new developments and slowing construction employment, apart from demand tied to data centers that have absorbed some skilled labor.
Dallas offered a more upbeat note. Apartment demand remained steady despite competitive leasing dynamics, and office leasing showed signs of improvement. Retail rents were under pressure but stable overall.
Out west, San Francisco’s commercial construction activity was subdued, tempered by new infrastructure investments in roads, health facilities and data centers. Leasing demand increased in manufacturing and logistics, though commercial vacancies pushed some rents lower. In contrast, retail rents ticked up slightly, while rates for office and industrial properties were largely unchanged.
The overall takeaway, according to Harvard and other analysts, is that economic momentum remains fragile, with the Fed’s regional reports underscoring both resilience and restraint across the country’s diverse markets.
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